Buck Co. has a deferred income tax liability in the amount of $162,000 at 31 December 20X7, relating to a $540,000 receivable. This sale was recorded for accounting purposes in 20X7 but is not taxable until the cash is collected. In 20X8, $360,000 is collected. Warranty expense in 20X8 included in the determination of pre-tax accounting income is $146,000, with the entire amount expected to be spent and deductible for tax purposes in 20X9. Pre-tax accounting earnings are $750,000 in 20X8. The tax rate is 25% in 20X8.

Required: 1. What was the tax rate in 20X7?

2. What is the accounting carrying value, the tax basis of the account receivable, and the warranty liability, at the end of 20X7 and 20X8? (Leave no cells blank - be certain to enter "0" wherever required.)

	2007	2008
Account Receivable:
Accounting basis
Tax Basis
Warranty:
Accounting basis
Tax Basis

3-a. Calculate taxable income and income tax payable, and income tax expense for the year 20X8.

Taxable income
Income tax payable
Income tax expense

3-b. Prepare journal entries for year-end 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4. Of the deferred tax adjustment recorded in requirement 2, how much is caused by the change in the tax rate and how much is caused by new temporary differences?

Change in tax rate
Temporary difference:
Account Receivable
Warranty

5. Calculate the deferred income tax that would be reported on the statement of financial position at the end of 20X8.

Deferred Tax Liability?